€5 

A7 


GIFT  OF 
ivir  .H  .L  .Leupp 


STUDY  ON 

ELIMINATION  OF  UNNECESSARY  EXPENSE 
FROM  ARMY  ADMINISTRATION 


PREPARED  BY  THE  WAR  COLLEGE  DIVISION,  GENERAL  STAFF  CORPS 

AS  A  SUPPLEMENT  TO  THE  STATEMENT  OF  A  PROPER  MILITARY 

POLICY  FOR  THE  UNITED  STATES 


WCD  9053-113 


ARMY  WAR  COLLEGE  :  WASHINGTON 

NOVEMBER,  1915 


511 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 
1916 


. 


WAR  DEPARTMENT, 

Document  No.  511. 

Office  of  the  Chief  of  Staff. 


ELIMINATION  OF  UNNECESSARY  EXPENSE  FROM  ARMY 
ADMINISTRATION. 


1.  In  Section  VIII  of  a  memorandum  to  the  Chief  of  Staff,  dated 
September  3,  1915,  the  Secretary  of  War  directed  that  a  "  study  be 
made  by  the  General  Staff  of  the  possibility  of  eliminating  any  un- 
necessary item  of  expense."    To  make  clear  the  character  and  scope 
of  the  study  desired  by  him,  the  Secretary  quoted  from  a  memo- 
randum of  instructions  issued  by  him,  under  date  of  April  29,  1915, 
the  substance  of  which  is  as  follows : 

*  *  *  *  *  *  * 

In  order  to  enable  me  to  obtain  proper  knowledge  and  to  be  wisely  guided, 
I  must  have  a  painstaking,  thorough,  impartial,  and  concentrated  investigation 
of  this  subject  matter.  Each  considerable  item  of  expenditure  must  be  studied 
with  a  view  of  reaching  an  impartial  conclusion  as  to  whether  the  thing  for 
which  it  is  expended  is  necessary;  whether  in  the  handling  of  the  money  our 
administrative  methods  are  proper  and  economical;  and  whether  we  are  re- 
ceiving the  proper  return  for  the  money  expended. 

*  *  *  *  *  *  * 
Certain  items  of  expenditure  need  not  be  considered  with  any  view  of  being 

able  to  lessen  them,  because  they  are,  by  their  nature,  fixed ;  and  the  only  thing 
to  be  considered  with  respect  to  them  would  be  the  administrative  methods 
through  which  the  money  was  expended,  and  a  consideration  of  whether  those 
methods  were  more  expensive  than  necessary.  *  *  *  I  mean  by  this  that 
certain  great  items  need  only  be  cursorily  considered,  because  it  is  not  my  in- 
tention to  attempt  economy  by  recommending  a  reduction  in  them,  unless  the 
reduction  is  one  that  has  to  do  with  the  administration  of  the  sum  as  con- 
trasted with  the  thing  for  which  expended. 

All  other  items  than  such  as  would  be  properly  comprehended  within  those 
just  mentioned,  I  desire  to  have  looked  into,  with  the  character  of  attention 
above  described  and  for  the  purpose  above  set  forth. 

2.  In  a  message  to  Congress  under  date  of  March  3,  1911,  the 
President  stated : 

*  *  *  Estimates  of  departmental  needs  have  not  been  the  object  of  thorough 
analysis  and  review  before  submission;  budgets  of  receipts  and  disbursements 
have  been  prepared  and  presented  for  consideration  of  Congress  in  an  un- 
scientific and  unsystematic  manner;  'appropriation  bills  have  been  without 
uniformity  or  common  principle  governing  them;  there  have  been  practically 
no  accounts  showing  what  the  Government  owns,  and  only  a  partial  representa- 
tion of  what  it  owes;  appropriations  have  been  overencumbered  ivithovt  the 
facts  being  known;  officers  of  Government  have  had  no  regular  or  systematic 
method  of  having  brought  to  their  attention  the  cost  of  Government  adminis- 
tration, operation,  and  maintenance,  and  therefore  could  not  judge  as  to  the 

30669°— No.  511 16  (3) 


GG7363 


economy  or  waste.  There  has  been  inadequate  means  whereby  those  who 
served  with  fidelity  and  efficiency  might  make  a  record  of  accomplishment  and 
be  distinguished  from  those  who  were  inefficient  and  wasteful;  functions  and 
establishments  have  been  duplicated,  even  multiplied,  causing  conflict  and  un- 
necessary expense;  lack  of  full  information  has  made  intelligent  direction  im- 
possible and  cooperation  between  different  branches  of  the  service  difficult. 

The  statements  contained  in  this  message  of  the  President  were 
based  upon  a  preliminary  general  investigation  and  resulted  in  the 
appropriation  by  Congress  of  funds  to  enable  the  President  to  con- 
tinue the  investigation,  and  to  start  the  construction  work  of  cor- 
recting the  defects  disclosed,  in  so  far  as  that  could  be  done  by 
executive  action. 

3.  A  special  commission  known  as  the  President's  Commission  on 
Economy  and  Efficiency,  commonly  referred  to  as  the  Cleveland 
Commission,  was  appointed,  with  Dr.  Frederick  A.  Cleveland,  a 
distinguished  economist,  as  its  chairman. 

4.  After  21  months  of  continuous  labor  and  the  expenditure  of  a 
total  of  $230,000,  the  President,  in  a  special  message  to  Congress, 
dated  January  8,  1913,  asked  for  the  appropriation  of  an  additional 
$250,000  to  provide  for  the  continuation  of  the  work,  which  he  char- 
acterized  as  only  begun.     The   Cleveland   Commission  is  merely 
typical  of  others  which  have  been  previously  appointed.     As  the 
result  of  their  investigations  much  valuable  information  has  been 
acquired,  but  constructive  work  of  correcting  the  defects  disclosed 
has  been  curiously  lacking. 

5.  The  foregoing  facts  are  cited  as  indicating  the  magnitude  and 
character  of  the  investigation  necessary  to  ascertain  the  data  desired 
by  the  Secretary  of  War.     It  is  apparent  that  many  months  must 
elapse  before  the  data  essential  to  a  proper  analysis  can  be  gathered 
and  put  into  budgetary  form,  which  must  be  done  before  items  can 
be  studied  by  themselves  and  in  their  relationship  to  other  items. 

6.  House  of  Representatives  Document  No.  854,  Sixty-second  Con- 
gress, second  session,  publishes  a  report  of  the  President's  Commis- 
sion on  Economy  and  Efficiency,  entitled  "  The  Need  for  a  National 
Budget."    A  study  of  this  document  leads  convincingly  to  the  con- 
clusion that  the  budgetary  form  of  presenting  fiscal  data  is  the  only 
means  by  which  either  the  national  or  a  departmental  executive  may 
be  apprised  of  the  nature  and  purpose  of  past  and  proposed  expendi- 
tures, and  so  be  enabled  to  intelligently  judge  of  their  necessity. 

7.  The  conclusions  arrived  at  by  the  Economy  and  Efficiency  Com- 
mittee  concerning  departmental  methods   of  transacting  business 
are  summed  up  in  a  report  dated  December  18,  1912,  which,  for  the 
reason  that  funds  were  not  available  for  continuing  the  work,  un- 
fortunately proved  to  be  the  final  report.     The  opinion  expressed 
is  to  the  effect  that  public  business  is  carried  on  "  at  a  very  high 

511 


cost " ;  that  methods  of  accounting  in  all  departments  are  such  that 
data  are  not  readily  available;  and  that  a  proper  balance  between 
economy  of  expenditure  and  efficiency  of  operation  can  only  be  main- 
tained by  "  building  up  a  permanent  organization  "  as  a  constructing 
and  responsible  agency  "  continuously  at  work." 

8.  Discontinuous  investigations  may  disclose  unnecessary  past  ex- 
penditures.    They  can  not  insure  against  current  or  future  waste 
in  a  different  quarter.     The  fundamental  step  in  the  "elimination 
of  unnecessary  expense"  is,  therefore,  the  organization  of  a  perma- 
nent agency  to  carry  on  continuous  investigation. 

9.  So  far  as  the  War  Department  is  concerned,  Congress  provided 
by  the  act  approved  February  14,  1903,  a  permanent  agency  equipped 
with  all  the  legal  powers  necessary  to  properly  supervise  expendi- 
tures.    Full  advantage  has  never  been  taken  of  this,  however,  to  set 
the  economic  side  of  this  machinery  in  motion  by  the  exercise  of 
executive  action.     Each  disbursing  agency  within  the  War  Depart- 
ment continues  to  operate  independently  of  the  others ;  and  although 
the  sanction  of  law  exists,  a  continuous  investigation  of  the  economic 
side  of  handling  funds  and  the  corresponding  constructive  work  of 
balancing  economy  against  efficiency  by  the  annual  preparation  of  a 
budget  has  never  been  instituted. 

10.  A  presumption  is  thus  created,  strong  enough  to  warrant  as- 
suming it  to  be  true,  that  wastage  still  occurs  regardless  of  the  ex- 
cellence  of   the   business   methods   of   each   individual    disbursing 
agency. 

11.  As  the  initial  and  only  step  possible  at  the  present  time  look- 
ing toward  the  elimination  of  unnecessary  expense,  a  division  or 
continuing  committee  of  the  General  Staff  Corps  should  be  em- 
powered and  instructed  to  pursue  a  continuous  investigation  of  this 
subject ;  and  should  be  made  the  responsible  agency  for  the  prepara- 
tion of  an  annual  budget  in  such  form  as  will  make  possible  a  more 
comprehensive  supervision  over  the  estimates  than  can  now  be  exer- 
cised. 

12.  When  this  has  been  accomplished  the  preparation  of  full  de- 
tailed information  will  become  a  matter  of  routine,  and  constructive 
work  may  anticipate  instead  of  follow  expenditures.     The  need  for 
intermittent  investigations  will  disappear  and  a  full  understanding 
of  past,  present,  and  proposed  operations,  together  with  the  inci- 
dental expense  attached  thereto,  will  become  possible. 

511 

o 


AN  INITIAL  FINE  OF  25  CENTS 


-lOOm-12,'43  (8796s) 


Binder 
Gaylord  Bros. 

Makers 

Stockton,  Calif.     '• 
PAT.  JAN.  21,  1908 


YC  62932 


C67363 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


